At more than Rs 65,000 crore, the mining scam in Odisha has surpassed that in Goa and Karnataka. The penalties, however, came too late

Prodded by the Shah Commission, the Odisha government has started satellite mapping to check illegal mining (Photo: Sayantan Bera)

In December last year, days before an inquiry commission headed by justice M B Shah was slated to visit Koira and Joda mining circles in northern Odisha, piles of documents were burnt in the office of deputy director of mines in Koira. In November this year, just days before the commission’s third visit, the Odisha government slapped a fine of Rs 65,493 crore on 104 mine lessees for extracting more than the permitted quantity of iron ore, manganese and chromite between 2000 and 2010 (see ‘Who’s who among offenders’).

The commission was set up by the Centre in 2010 to probe illegal mining across India. It is expected to submit its report on Odisha by December end.

At present, of the 600 leases in the state, 388 have been either suspended or temporarily discontinued. The state environment minister recently told the Assembly that 111 mines have been listed for violating Environment Protection and Forest Conservation Acts. In October, the state government notified that second and subsequent renewal of mining leases will be restricted to captive users, that is, lessees without any industry of their own will not be eligible.

The Rs 65,493 crore fine has been recorded as royalty for overextraction and transit passes (given by the state to vehicles carrying minerals out of mines) issued. “But what about the mining beyond leasehold areas which include forestland?” asks Union minister and Congress MP from Odisha Srikant Kumar Jena who says the total loss from illegal mining in the state is Rs 4 lakh crore. Accusing the Odisha government of hoodwinking people, Jena says, “It has imposed the fine on mine lessees to put a brave face in front of the Shah Commission.”

Horror unfolds

The decade beginning 2000 witnessed a boom in iron ore prices. To reap benefits, miners in Sundargarh and Keonjhar districts, which include Koira and Joda circles, started mining in excess of the limit approved by the Indian Bureau of Mines. They stretched operations beyond their lease areas and continued extracting even after their leases had expired. Mining was done without acquiring mandatory environment and forest clearances or the “consent to establish” from the state pollution control board.

The blank board at Koira block development office is an ironic reminder of the underdevelopment in the mining hot spot

Traders transported the overproduce by bribing through check posts. The iron ore was eventually exported to China. Thousands of trucks carrying ore moved daily on broken roads, says Satyabrata Panda, an economist based in Bhubaneswar, while recalling the day in 2005 when his car moved inch by inch in Sundargarh to cover four kilometres in eight hours. A 2008 report by the Auditor General found that many trucks in the Baripada mining circle in Mayurbhanj district were using number plates assigned to motorcycles. Of the eight circles reviewed, six did not have government check gates, says the report.

In 2009, a report by the Principal Chief Conservator of Forests, Odisha, provided evidence of mining in forestland, tampered boundary pillars, construction of roads inside reserve forest in Keonjhar and Sundargarh, and rampant illegal mining along the Jharkhand border (see ‘Pushing the pillars’). The same year, Rabi Das, senior journalist based in Bhubaneswar, filed a petition in the Supreme Court alleging organised illegal mining with active support of the state government. Das argued that 155 leases were operating “without any valid authority… most of which include forest areas and by whom the mandatory clearances from the Central government has (sic) not been obtained ”.

In response, the court appointed a Central Empowered Committee (CEC) which submitted its report in 2010. The report observed that of the 341 mines operating, 215 were working under the “deemed extension” clause of the mineral concession rules under the Mines and Minerals (Development and Regulation) Act. “The deemed extension clause is primarily meant to deal with contingency situation and to ensure that mining operations do not come to an abrupt end… This provision is not meant to be availed of indefinitely. Continuing mining over a long period of time without renewal of the mining lease becomes a potential source for serious illegalities and irregularities,” notes the report.

It observed that mining activities were going on in a large number of mines without requisite approvals under the Forest Conservation Act and the Air and Water Acts. Despite the findings, many violators, especially big companies, got away without any hassle, says Panda. Tata Steel, for instance, renewed its mining lease and increased production capacity from six million tonnes to 12 million tonnes in a year even when the Divisional Forest Officer (DFO) of Keonjhar had slammed the company for violating forest laws and illegal mining in 2011. Similarly, Rungta Mines renewed its lease despite violations. The DFO was transferred after he filed damning inspection reports.

Panda, who has been analysing the mining sector, points to another problem. “For the 80 million tonnes of iron ore produced in 2010-11, the environmental cost of handling overburden (waste produced while mining) would be Rs 26,000 crore. This is absurd since the market valuation of 80 million tonnes is less than Rs 10,000 crore,” he says.

Fine: a face-saver?

Referring to the Rs 65,493 crore fine, Supreme Court lawyer Jayant Das says the notice of fines given to mine lessees will not stand in the court of law. “The firms were not issued a show cause notice where they would have a chance of replying,” adds Das, who is fighting a case on illegal mining in the state.

Prafulla Samantara, a civil rights activist in Odisha, says the penalties were imposed as a face-saver ahead of the Shah Commission’s visit. “What was the state government doing for 10 long years while the loot was on?” he asks.

Two instances bring home the point. Earlier this year, the state had fined Raikela Iron Mines, leased to Geetarani Mohanty, Rs 40.37 crore for excess production of iron ore. The notice was issued after the Auditor General raised an objection in the 2011-12 audit. The mine lessee appealed to the revision authority in the Union Ministry of Mines and got a stay on the order to pay fine. Similarly, a fine of Rs 1,132 crore imposed on Indrani Pattnaik mines was stayed. “The state government is not serious about recovering the amount,” says lawyer Das.

Another hurdle to collect the fine is in the definition of illegal mining. A recent amendment to the mineral concession rules under the Mines and Minerals (Development and Regulation) Act defines illegal mining as any mining outside the leasehold area. Overextraction inside the leasehold area cannot be termed illegal and, therefore, the penalty will not be valid, mine lessees argue. Deepak Mohanty, state director of mines, says, “Fines were imposed under the Mines and Minerals (Development and Regulation) Act. Stay orders of the revision authorities are not the last word.”

Fifty years of mining have done little to improve people’s lives, says Kanhu Charan Mohanty, activist in the region from NGO Ekta Parishad. Despite overproduction of minerals, jobs are not easily available as most excavation work is done by machines. Beginning 2002, with the boom in mineral prices, people abandoned agriculture—everyone wanted a share of the booty, either by illegal mining or by transporting the iron ore. Most areas now lie barren. With streams dried up, people depend on tankers from mining companies for drinking water.

At the entrance to the Koira block development office is a signboard listing its success profile—from check dams and farm ponds to peripheral development. It’s telling: there are no numbers on the white board, only a coat of red iron ore dust.

The apex court’s high-powered environment panel said that the illegal mining was carried out allegedly with the “tacit” approval of the previous Digambar Kamat government.

NEW DELHI: Rampant illegal iron ore mining in Goa, which has devastated the state, is much larger than the illegal mining in Karnataka, and the Union ministry of environment and forests granted green clearances to 162 mines near national parks and sanctuaries in breach of Supreme Court orders, a report by the CEC (central empowered committee) said.

The apex court’s high-powered environment panel also said that the illegal mining was carried out allegedly with the “tacit” approval of the previous Digambar Kamat government.

The bench issued notices to the Union and state government seeking their response to the report, which said, “A very large number of mining leases were being operated by persons other than the lessees and in flagrant violation of the provisions of mining law and in all probability with the tacit approval of the state government.”

The report said that the state experiences plenty of rainfall, which washes the sediments of iron ore mining to the rivers, choking and irreversibly damaging the sensitive Zuari and Mandovi estuaries complex, said to be the largest in the country.

The CEC said that during 2006-2011, 39.56 million tonnes of illegal iron ore was exported from the state.

“The bulk of the mining leases are in the forests or natural vegetation and consequently mining has take a heavy toll on Goa’s natural vegetation and wildlife,” the environment panel said through member secretary M K Jiwrajka.

“The environmental clearances granted by the Ministry of Environment & Forests, (MoEF) for the 19 mining leases located within the wildlife sanctuaries and for another 23 mining leases located within a distance of upto 1 km from the boundaries of nearby national parks / sanctuaries being in violation of this Court’s orders dated. The mining operations in such mining leases may be prohibited,” the report said.

The 124-page report was placed before a three judge bench headed by Justice Aftab Alam which would consider its findings and recommendation in the next date of hearing.

Taking note of the Justice M B Shah Commission report which estimated a whopping Rs.35,000 crore loss to the exchequer due to illegal mining in the last 12 years, the bench had halted mining operations in all the 90 mines in Goa.

It had also asked the CEC to submit its report on the illegal mining in the state within four weeks.

The committee in its report said that on the line of Karnataka, Goa also prepare a reclamation and rehabilitation (R&R) plan and the apex court should examine the environmental clearances given to the mining leases.

“Goa may be directed to immediately notify comprehensive Rules to regulate the storage, transportation and shipment of mineral,” the report said adding “Till such comprehensive Rules are put in place, the resumption of mining operations may be not be permitted.”

The CEC said that mining operation be allowed only after Environment Impact Assessment is done and reclamation and rehabilitation (R&R) plan is prepared.

“The mining operation may be allowed to be resumed in Goa by the mining leases not found to be involved in any illegalities only after (a) the Macro Level IA study report of the ICFRE is received by this Court and decision regarding Taluka wise ceiling on permissible annual production from all the mining leases is taken (b) the survey and demarcation of the mining leases by the team constituted by this Court is completed and (c) the R&R Plans are prepared,” the report said.

The Committee also recommended that additional Principal Chief Conservator of Forests, Bangalore may be directed to verify that the mining operations will not have adverse impact on the flora, fauna or wildlife habitat and the status of the forest areas have correctly been stated by the companies for seeking environmental clearances.

“This court may consider taking a decision regarding validity of such environmental clearances after considering the recommendations of the Standing Committee of the National Board for Wildlife, the report of chief conservator of forests Bangalore and other information / details. Till then the such environmental clearances may be directed to be held in abeyance,” the report said.

The CEC filed its report in compliance of the Supreme Court direction which passed the order on a PIL filed by an NGO, Goa Foundation, seeking probe in the illegal mining activities in the state.

The state government had on September 10 temporarily suspended all mining operations till October 2012, but the petitioner alleged that suspension did not affect the trade as the private companies are transporting the ores from mines.

The court is already seized of the illegal mining cases in Karnataka where, after halting all mining activities for more than year, it had on September 3 allowed operations in only 18 mines out of more than 100 mines where the irregularities were minimum.